A hallmark of this blog is impatience. To be fair, though, it’s endemic today. Nobody can damn wait for anything. It’s why savingsless young couples expect a better first house than their parents ever had. It’s why consumer debt’s exploded. It’s why we’re doomed. At least the impatient ones.

Those who come here, read my words and expect house prices to plunge 20% by the weekend don’t get it. The market took about a decade to inflate, survived a bubblectomy in the winter of 08-9, and is now etched in the public’s mind. It won’t last, of course. But the deterioration will not be quick, nor will your idiot brother-in-law admit it until the evidence is overwhelming.

The likely scenario is a correction in prices this year – a classic trap. Impatient house hornies will jump in thinking they’ve scored a bargain at 15% less than the peak, only to despair at what comes next – several years of steadily eroding values. As house prices revert to their historic mean, adjusted for inflation and a sloth economy, the true bottom will be far lower.

The process has begun. It may be masked in the demand areas of Toronto and Vancouver where the population is deep and the gene pool shallow, where enough greater fools exist to trick the media. But the perimeter is already suffering. Check out recent sales levels along the south shore of Nova Scotia, in Muskoka, the Okanagan or Fraser Valleys – all traditionally demand areas, where realtors are now taking up knitting. And on a drive yesterday through 300 clicks of Ontario heartland, it was impossible not to marvel at a sea of languishing listings.

There are two very slow and immensely powerful forces which will see this malaise spread everywhere. More powerful even than rising interest rates (whenever they arrive) or the inevitable retreat of hot Asian money.

The first is demographics and the inexorably rising influence of millions of wrinkly old farts who will be selling their houses to afford aspirators, corneas and gas for their Harleys. Fact is, 70% of us now have no corporate pensions, with most Boomers thinking their houses were all the financial plans that they needed. Surprise!

This is an unstoppable influence on real estate values spread over the next decade. Not all Boomers will sell of course, since some will reverse-mortgage (those who hate their kids) and others will try to tough it out. But of the nine million in this cohort, more than enough will decide to bail to tank prices for years.

The more influential factor is debt.

Personal indebtedness has grown right alongside real estate values. In some places, this is the dirty little secret never shared. It’s why working families living in million-dollar homes in places like Vancouver have to keep tenants in the basement, and still eat into their lines of credit trying to cope with insane mortgage payments. It’s why we have more per-capita loans now than Americans, why the average down payment has shrunk to well under 10% and mortgage debt’s become an ugly trillion-dollar behemoth.

Fact is, borrowings are easy to get, and a bitch to get out of. Worse, when real estate starts to fall apart, houses get illiquid. It’s a lesson being learned again these days in Abbotsford, Kelowna, Brampton and Lunenburg. You’re next.

And the debt doubts are already with us. A survey done four weeks ago for IG canvassed 1,020 people and found 75% are in hock. Buying or renovating real estate accounted for 87% of that debt. Six of ten people are uncomfortable with their level of indebtedness, and 30% are losing sleep over it. Worse, 35% say they’ll be cutting back on spending to try to cope – which is how recessions start and house values crumble.

With wages static and unemployment stuck, how exactly are people supposed to pay off these fat loans? Will they spend five or ten years living on KD, clipping Wal-Mart coupons and riding bicycles, to make debt repayments? Or try to sell their costly houses to gain mortgage relief? And how’s either of those anything but negative for real estate?

Hard to see how this could be more obvious. Kinda makes you wonder why all the smart people aren’t selling to horny Asians or local house porn addicts.

Unless they’re not.


#1 TurnerNation on 05.29.11 at 7:54 pm

First :)

#2 Crazy on 05.29.11 at 7:56 pm


Second. Try harder. — Garth

#3 raincouver on 05.29.11 at 7:58 pm

Sell now or forever be screwed?

If selling’s been on your mind, why wait? — Garth

#4 Crazy on 05.29.11 at 8:02 pm

I did try!

#5 Crazy on 05.29.11 at 8:03 pm

Interesting that you are now calling for a ‘slow melt’.

It started before you metamorphosized. — Garth

#6 Crazy on 05.29.11 at 8:11 pm

Interesting because you used to call for a serious drop in home values “next year”, only you were writing it last year. Now it will take decades (perhaps) and all the basement dwellers are sure to feel duped. They gotta keep waiting like that good, compliant, well serving canine in the picture. Keep waiting folks! It is different in Canada, because Canada is a great country.

#7 Hovering on 05.29.11 at 8:29 pm

I had a dog called crazy

#8 Hovering on 05.29.11 at 8:31 pm

couldn’t stand calling it in every night at the top of my lungs

so I shot it

(Garth’s been preaching slow melt for years Crazy..)

#9 domain on 05.29.11 at 8:32 pm

Crazy, pull your head out of your @ss. Had the free market been allowed to exist, housing would not have stopped its fall that started in 07/08. All that happened was the CMHC tool was exploited by the feds to prop this bubble up a bit longer, and people like you took the bait to an extreme that no one could have predicted. I hope you put your money where you mouth is, so the bitter taste cures your delusion for your own good; maybe you would become a contributor to society then.

#10 Mr. Lee on 05.29.11 at 8:40 pm

You hit the nail on the head.

Slow melt over a period of time, not a large down turn as in the US, although there it was not as sudden as some would have us believe.

In today’s world of keeping up with the Jones, the middle class is judged by what it owes rather than what it is worth. We are to a great part to blame for this outselves. No one puts the gun to our head and says, “buy that 700k house in SE Calgary that less than 10 years ago sold for half as much.” No one says, “buy that new 60″ LCD although there is nothing wrong with your 40″ unit, and buy it on credit.”

People by and large complain about their debt and the consumer society, yet they contribute to it. I read an article not too long ago in the Calgary Herald about the new movement taking place that is all about de-cluttering and getting rid of too many items including debt in one’s life.

I hope that this is a trend, or the middle class in Canada will end up the same way as the middle class in the US has.


There is more to life that being house poor, granite and SS do not by peace of mind………they serve to make the banks richer and you poorer.

#11 Cato on 05.29.11 at 8:46 pm

The looming question everyone should dread is how many of the over-indebted are already in negative equity. Paying off debt with credit will only float the boat for so long. If the debt dance ends suddenly maybe we could actually see a US style collapse. A year ago I would have said collapse is out of the question, now I’m not so sure. The level of debt out there is staggering and instead of taking a cautionary warning the lemmings just kept jumping off the cliff.

#12 Skeptic on 05.29.11 at 8:49 pm

Yeah, I’m impatient, as blogs the likes of this one started out predicted a sharp, short, severe crash several years back. Hasn’t happened. And I’m left looking like an idiot for waiting.

And you continue to deride those who point out the effect that Asian buyers have had in Vancouver, but as far as I can see you’ve never offered any numbers to disprove their now obvious effect on the market. Obvious to anyone who lives here, anyway.

Yes, Asians. All my fault. Please forgive. — Garth

#13 Cognizant on 05.29.11 at 8:50 pm

Anecdotal: Two recent conversations with RE pumpers who have changed their tune. One a RE agent has sold her house because “the market is turning down, you know.”
A real estate crash is in the works, and with true believers changing their tune like this I don’t hink it is going to be a slow melt, watch out below!

#14 45north on 05.29.11 at 8:53 pm

To: Hon Jim Flaherty
House of Commons

I support tightening the mortgage rules so as to require 10% down payment and 30 year amortization. You should have tightened the rules sooner but better late than never.

Reply (edited):

Recently, we announced further important and prudent measures to encourage Canadian families to make sound investments in their homes. First, we reduced the maximum mortgage amortization period from 35 years to 30 years for new government-backed insured mortgages. This measure will significantly reduce the total interest paid by Canadian families over the lifetime of their mortgages.

Second, we lowered the maximum amount lenders can provide when refinancing insured mortgages from 90 percent to 85 percent of the value of the property.

Third, we withdrew government insurance backing on home equity lines of credit (HEILOCs). Taxpayers should not bear any risk associated with such consumer credit products.

Our Governments’s ongoing monitoring and sound supervisory regime, along with the traditionally prudent approach taken by Canadian financial institutions to mortgage lending, has allowed Canada to maintain a strong and secure housing market.


James M. Flaherty

#15 JohnnyBGood on 05.29.11 at 8:55 pm

I don’t know when the housing boom will go bust, how far prices will drop, or how long it will take to bottom. There are too many variables (that we know about) and some (cash rich Asians, perhaps?) that cannot be easily foreseen.

However, the signs are there:

Banks conjuring up new fangled mortgage products (to scrape the bottom of the barrel). Debt consolidation services exploding (they are even telemarketing now). Payday loan moneychangers growing like dandelions on T.O. lawns. Reverse mortgages (what a scam) becoming more popular. Wages not climbing with inflation. Negative real interest rates. Banks LOWERING mortgage rates (scraping through the wood at the bottom of the barrel). House prices rising faster than CPI inflation, and more than doubling in a decade, or less. Bidding wars. Everyone becoming a landlord. Speculators flipping properties like flap jacks. Down payments you can actually borrow (scraping underneath the barrel now). Not to mention all the stats provided by Garth and others.

To me, it feels like the US circa 2005. Or Pompeii around 78 AD.

#16 Ben on 05.29.11 at 8:57 pm

#6 Crazy

“It is different in Canada, because Canada is a great country.”
Canada is home but it’s stupid expensive… very very very stupid expensive and i’m tired of it.

#17 T.O. Bubble Boy on 05.29.11 at 9:00 pm

But, the “smart money is on Toronto condos”… at least according to this piece in this Hong Kong paper:

” said most investors look for capital gains rather than rental return. On average, the rent for each square foot was C$2.50, meaning a 680 sq ft apartment can generate a monthly rent of C$1,700.

The condo owner would need to make a mortgage payment of about C$1,617 a month, based on a typical five-year interest rate of 5.69 percent.

In addition, the owner would need to pay property tax and maintenance fees which could add another C$450 per month on average in monthly expenses.”

So, let me get this straight. The ‘smart money is on Toronto condos’, yet even the example in this article shows that the owner has a $400-$500/month shortfall???

This is why the Toronto condo bubble has already burst — too many “investors” putting their hope in Negative Gearing like the Aussies.

#18 The Original Dave on 05.29.11 at 9:01 pm

Lets hear from the streets of Kelowna – what’s going on there? I know there was hysteria a couple of years ago. Everyone claimed that Kelowna was a special/secluded place.

What is the public sentiment? What is the guy at the cafe saying? The guy at the corner store? I want to know what the general opinion is of the people living in Kelowna. Do they realize what’s going on yet?

#19 Utopia on 05.29.11 at 9:10 pm

#6 Crazy on 05.29.11 at 8:11 pm

“Interesting because you used to call for a serious drop in home values “next year”, only you were writing it last year”

Other than a few irrational centers like Vancouver, Toronto and Saskatoon which might actually stay delirious longer than any normal person could have predicted, our melt has already begun Crazy.

Plenty of folks are already stuck with no ready buyers in sight and this is even without a glut of houses on the market. Witness places like Victoria, Nanaimo or Kelowna just for starters.

The hurt in R/E in many places in the country is being masked by the continued exuberance of the major metro markets. Fun with statistics and numbers make it all seem OK when you average it all out though.

In any event, I don’t recall a prediction for “serious drops in home values” to take place this year but I clearly remember that the message was for a long slow melt. We are getting that already.

You might be thinking of the doom-sayers over at theautomaticearth who were calling for spectacular declines in home values but that has never been recognized as a reasonable outcome to most who come to this site.

#20 LJ on 05.29.11 at 9:10 pm

The slow melt is likely. Some areas have already had the rug pulled out from under them but others will take years to tank as sellers refuse to face reality.

In the US, the initial hit was well publicized and we saw all the stories about Las Vegas and Phoenix, which are still slowly melting away. It was not until late last year, nearly 5 years after the market started imploding, that places like Seattle or Santa Monica finally succumbed to the crash.

Sure, Vancouver or Toronto might be the last place to go, as values inch upwards at the top of the hill, but by then people will be paying 3 million for tear-downs and that “measly” 20-30% hit will be serious money that could buy several spiffy new houses with pools or entire apartment complexes south of the border.

#21 Calgaryillusion on 05.29.11 at 9:16 pm

Throw in a red herring such a Greek or Spanish default and I think you will see housing prices fall extremely fast (just like thevrest of the economy). Scary thing is that it is beginning to look like Lehman v2.0 on the horizon. Remember how fast real estate eroded in fall of 2008? Odds of this happening again seem imminent.

#22 Dom on 05.29.11 at 9:19 pm

#11 Cato on 05.29.11 at 8:46 pm
The looming question everyone should dread is how many of the over-indebted are already in negative equity. Paying off debt with credit will only float the boat for so long. If the debt dance ends suddenly maybe we could actually see a US style collapse. A year ago I would have said collapse is out of the question, now I’m not so sure. The level of debt out there is staggering and instead of taking a cautionary warning the lemmings just kept jumping off the cliff

You have thousands of people who bought using their credit cards for the downpayment. You have people using their LOC to make the mortgage payment. You have debt paying off debt. Canada debt ponzi is bigger then Garth can even imagine. If free markets were allow in Canada the housing bubble would crash in under 24 hours. People who are sub-prime wouldn’t be able to get prime interest rates. I have no problem with people without money to buy homes but they would be paying 15% instead of 2.25%. Canada’s housing ponzi is much bigger then the US housing bubble. Canada is different it’s much worse.

#23 Skeptic on 05.29.11 at 9:19 pm

Ah, you’ve started editing out anything that might embarrass, huh?

“Further retrenchment on your part. What needs to happen to force an admission of error on your part? Another year year of these prices? Two? Five? Ten?”

Actually that was unintentional. But the embarrassment saved was your own. — Garth

#24 Alex on 05.29.11 at 9:22 pm

“Bubblectomy.” Priceless.

#5 Crazy: “Slow melt” has been the prognostication for a very long time, folks. Hmm…who could “Crazy” be, folks? Though I do like this nickname better – very apt.

45North: Good on you for making your thoughts known outside this blog.

#25 Barrie profit taker on 05.29.11 at 9:22 pm

On a weekly realestate show called “Hot Property” (on CP24 if you want to google it) realestate pumper Al Sinclair tells the audience to stop listing their houses or they’ll kill the market (those are his words).

If that”s not a sign of trouble to come I’m not sure what is.

Keep up the good work Garth.

#26 Dom on 05.29.11 at 9:28 pm

The Socialist Conservative are a threat to Canada. Why would the social CONservative back Home Equity Lines of Credit in the first place? Can any social conservatives explain that? You can see the down turn in the fake economy taking hold as people with NO MONEY can not borrow more money that they can NEVER pay back. I hope the socialist conservative can stop their socialist policies and become conservatives again. But I doubt it.

45north #14
” Third, we withdrew government insurance backing on home equity lines of credit (HEILOCs). Taxpayers should not bear any risk associated with such consumer credit products.

#27 An Cat Dubh on 05.29.11 at 9:28 pm

Funny pic. I used to do that with my dog and my friend’s dogs. I seen a sign outside a real estate office in Penticton on Main St. that says Realtor on Duty. I should get a pic of a dog whizzing on that and send it to you for one of your future blog postings.

#28 TaxHaven on 05.29.11 at 9:32 pm

Never mind just housing…how much of this economy is REAL and how much exists only in the cheap-money matrix? Canadians are already massively in debt.

Housing will fall, at some speed, YES.

But what about jobs? All those who work for governments, including those in the military social program. Government contractors. Nearly everyone in the education system. All those who work in businesses that have no raison d’etre save artificial government decrees: driving schools, lawyers, notaries, lobbyists, lifeguards, many airline employees, insurance, installers of wheelchair ramps. And loads of chiropractors, dentists, home care nurses, doctors, drug manufacturers, etc., all dependent on government health systems.

And what would happen to our tens of thousands of real estate agents were interest rates to return to market-determined levels and cheap mortgages disappear?

Add all those even now doubling up, forced to rent basements, forced to remain in school to escape the (non-existent) job market, university-educated baristas, taxi-driving holders of doctorates. (Are there any holders of doctoral degrees NOT employed by government…?)

Don’t forget those businesses which won’t be able to make a go of it in the coming semi-permanent recession: sellers of massage chairs, poodle groomers, nail clippers, Starbucks, tanning salons, installers of home vacumums, anything to do with housebuilding…

This whole Potemkin economy seems to me to be held up by the slimmest of gossamer threads. If interest rates aren’t allowed to return to reality, inflation will ROAR.

In any case, Garth is entirely correct on the future of housing…

#29 Crashing Debt Tide on 05.29.11 at 9:38 pm

The great, late, Canadian house turf boom is officially over. Prices in cities in Canada have hit the high tide mark this month, and now will to start rapidly receding everywhere. Rural areas are already drowning, small towns up to thier noses, and big urban spaces are next in line to gasp for air pockets in a stalling market.

Like the 9.0 tsunami in Japan, the global real estate debt wave is washing over Canada with the same post apocalyptic trauma being experienced in Spain, USA, Ireland and Iceland was wide, rapid and forceful on the aggressive way up … taking everything high with it floating every piece of junk up with it. But now it flows out and grinds everything of “value” into pulp. In the next phase we will see all the little, bitty, pieces of house debris, debt, equity-evaporation, security and a consequential generational distaste for a frozen asset that cannot be liquidated. ‘Boomers’ especially will live out their days as ‘doomers.’

Real state agent euphoria aside, the manic phase is over. No amount of promotional prozac will get your home-sale heart beating again once it stops.

Were all Fuk..ishima’ed

#30 BrianT on 05.29.11 at 9:38 pm

At least somebody is making serious money as Greece circles the toilet bowl-maybe they could buy some Vancouver mansions so we could all benefit

#31 Siddelly on 05.29.11 at 9:41 pm

#12 Skeptic

It seems the question will become ” Are there enough corrupt Asian politicians/Sweat shop owners/Billionaire buying agents to reverse the maniacal Tsunami bubbles deflation once it has finally been terminally pricked. 30 homes purchased by Mainlanders in the COV last year and a lot of these people don’t even live here. Canada is just an insurance policy for these people. Yes there will be a reckoning.

#32 45north on 05.29.11 at 9:46 pm

slow melt in Canada:

I think one big factor is shadow inventory. In the US, banks have been slow to foreclose. The reasons are legion. In Canada we don’t know what the banks will do but the longer they wait the less the house is worth, also they cannot claim the insurance money unless they foreclose. If Canadian banks repossess expeditiously then it will be a hard crash.

#33 Utopia on 05.29.11 at 9:48 pm

#9 domain on 05.29.11

Exactly Domain, our housing market was on track to follow the lead of the US and were it not for the emergency rates we would be in a different world right now.

The original prediction for a major correction was completely valid and had stimulus intervention, rule changes with CMHC and easy money policies not intruded to save our sorry arses we would be nursing a major deleveraging process already.

Plenty of people think that we have only put off our own day of reckoning until later and the pain will be worse as a result. They may be right judging by the haircuts some homeowners have already taken this year.

In any event, the idea that a sudden crash in home prices might occur has long since been dispensed with as we acknowledge that the indebted will most likely hang tough and carry the burden despite the financial hardship and this will take place over many years.

On that point, I have to admit that even I overuse terms like “the bubble popping” etcetera which is not accurate because the picture it paints is much too dramatic for what is likely ahead.

A deflation in asset values is much more appropriate. The US market has been in a long slow decline for several years now. Even that agony only shaved 30% or so from average prices and what looks like a crash in relative terms was hardly an instantaneous event.

So put away the popcorn, a crash is not in the cards.

#34 bill c on 05.29.11 at 9:53 pm

We have a new fed budget coming early june. Boc rate decision Tuesday. Heres what will happen. feds will keep rates same but hint heavily that rate hike will happen in July. Dollar will rise. Feds budget will lean on cuts and again warn of heavy personal debt. Ireland did same thing a few years back. Let me tell you something about Ireland. They will not suffer as much as Canadian will.
We are looking at 50% correction.

#35 BPOE on 05.29.11 at 9:54 pm

Stanley Cup Champs = Vancouver
Global World Champs = Vancouver
Houses in Vancouver Soaring = BPOE
We are the Champions my friends
and we’ll keep on owning to the end
We are the Champions We are the Champions
No time for renters cause We are the CHAMPIONS OF THE WORLD
Congrats to all the Owners in Vancoover. Prices set to soar as interest rates stall then fall. We WON! BIG TIME! Junius and the american made a UFD UNRECOVERABLE FINANCIAL DECISION. Shiller should be held liable for showing how little intelligence he has regarding BPOE. Dead wrong in everyway just like the bitter american

#36 BPOE on 05.29.11 at 9:55 pm


#37 Tom from Mississauga on 05.29.11 at 9:57 pm

Went to Shoppers World in Brampton. Sure are lots of retail space for lease. Same in Mississauga, lots of now empty commercial and retail space. Bond market 2 year GoC bond signals recession started already. US stocks are still a buy here though. CAD wont hold.

#38 BPOE on 05.29.11 at 10:01 pm

I’ve been stating this for quite sometime now. Any Canadians (the weak bids) defaulting on their mortgages will be mopped up by the international investors (strong bids). This applies to only top shelf locations like Vancouver. We buy with CASH.
Folks don’t you see? Don’t you get it? It really is different this time and has been for quite sometime now.

#39 Siddelly on 05.29.11 at 10:02 pm

#28 TaxHaven

You forgot to wonder what would happen to our supply of cheap foreign labourers who build Vancouver steel and concrete highrises and usually go back to Mexico stiffed on their final paycheck. Who will pick our precious Blueberries? There is more wrong in Canada then just RE values.

#40 SMOKING MAN on 05.29.11 at 10:02 pm

Gatho You just don’t get it bro……..

Our education system has churned out for the last 20 years duh zombies. Tax farm banker slaves.

The propaganda machine is a lot stronger that your fundamentals and your loyal smart followers.

As soon as the bankers sense the real estate beotch is done, they and the media will pump RE like there is no tomorrow, the gloom and doom pumped by the media lately is designed to keep prices from pushing to high to fast. The second the machine senses the tax farm slaves think RE is not that cool and the tax farm slaves start thinking for a change they will blow real estate sunshine like the shock wave of a nuke. They will make the garnet loving female spouses saying sign or die to hubby.

You and your disciples of gloom and doom are no match for the machine, Play the player is my motto.

Watch and learn little grasshopper Garth

#41 Devore on 05.29.11 at 10:03 pm

#17 T.O. Bubble Boy

On average, the rent for each square foot was C$2.50, meaning a 680 sq ft apartment can generate a monthly rent of C$1,700.

Really? Where is the average rent $1700 for a 680 sqft box?

#42 Bolo on 05.29.11 at 10:05 pm

Garth has been saying all along that there will be an initial correction in home prices followed by a slow year to year melt.
Those in disbelief need to start paying more attention.

#43 wicked as it seems on 05.29.11 at 10:15 pm

Second. Try harder. — Garth

Ya! ve hav vays of making you try harder. (Say with German accent)

#44 Siddelly on 05.29.11 at 10:18 pm

Polar opposite to my Point Grey step-mom who sold in 10 days to a Mandarin speaker with zero English ability, my high school buddy just listed his Abbotsford townhouse next to Highway one and this unit that was selling for 195,000 a year ago is getting no calls after 2 weeks on the market at 171,000. Looks like the HAM isn’t lurking anywhere out in the valley. His agent wants a price reduction and I think that may happen sooner rather than later.
We sold our Burnaby home in February 2009 after 6 months and 4 price reductions totaling 80 grand and so I know what it feels like to wait for home buyers to call in a falling market. Its going to become a more common experience.

#45 T.O. Bubble Boy on 05.29.11 at 10:21 pm

@ #40 Devore:

I think you proved my point, only more so — if rents for Toronto condos are say $1200-$1300/month, the story gets even worse.

I found it bizarre that the same article would claim that Toronto condos are a great investment, while also point out that the owners are guaranteed to lose hundreds of dollars per month.

This seems like the entire world is bad at math.

#46 JSS on 05.29.11 at 10:27 pm

DId you buy ROyal Bank shares last week, at 3% lower, plus an increased dividend from 80 cents to 84?

#47 Thetruth on 05.29.11 at 10:31 pm

Congratulations Canada. Gold just broke thru $1500 Cdn!

#48 Hoof - Hearted on 05.29.11 at 10:32 pm

I see US Chain LOWES is building in Queensborough area of New West BC

I say it closes its doors in 2 years…picked the worst time to open.

#49 45north on 05.29.11 at 10:35 pm


pretty funny

Tom in Mississauga: Went to Shoppers World in Brampton. Sure are lots of retail space for lease.

Tony said that real estate values in Brampton would stay up while downtown Toronto collapsed.

I said nope, Brampton would drop the hardest and fastest.

#50 Utopia on 05.29.11 at 10:36 pm

Maybe this already got posted. I thought it was really interesting to hear that the Competition Bureau was suing TREB (Toronto Real Estate Board) for anti-competitive behavior.

TREB objects on the basis of client confidentiality though and claims its hands are tied saying “There are consumers on both ends of a real estate transaction where contractual and private information are involved which TREB is legally and morally required to respect”.

Well that should stifle any attempts at creating transparency in the cartels control over information about the regional markets. Or not. We will see how the Judge views the arguments.

It would sure be nice to have more Zillow-like sites in Canada though. A more open system would help keep prices down and allow more scrutiny of the statistics and data. It might help keep the Realturds(c) honest too by removing the shroud of secrecy and creating open access.

Here is the article from the CBC if you missed it.

#51 nonplused on 05.29.11 at 10:42 pm

Nice post Garth. Not much to argue with, although I would like to point out that the trend line is a long ways down. Prices could easily move 30% down in total in some markets.

With all the rain we had in Calgary the last week, mowing the lawn is turning out to be a real bitch. It’s going to take me 2 evenings and $20 worth of gas to get it done! Maybe renting an acreage wasn’t such a great idea. It’s way to much work.

#52 Hoof - Hearted on 05.29.11 at 10:46 pm

Arizona Lands sells for 8 percent of peak price

A 10,200-acre desert site in Arizona sold for $32.5 million this week, five years after a group with investors including the California Public Employees’ Retirement System paid $400 million for the land.

The site … had been planned for a 42,000-home community by the Calpers- financed group when it was purchased in 2006.

#53 Debtfree on 05.29.11 at 10:49 pm

@31 siddely …. You don’t have to look so hard at asians for corruption . this would need our federal export minister to be involved . Albertan rate payers will make a few like morgan and others mega rich . And just this rotten deal will also dwarf all the asian money real or imagined.

#54 Nick on 05.29.11 at 10:51 pm

Canadians don’t seem to get that most homebuyers in the US during the bubble years weren’t subprime pizza delivery guys. They were working families doing what the brother in law and Time magazine told them was the best thing to do : buy a house and make a killing. Just what Canadians have been doing for 10 years now.

#55 Utopia on 05.29.11 at 10:55 pm

#37 Tom from Mississauga

“Went to Shoppers World in Brampton. Sure are lots of retail space for lease. Same in Mississauga, lots of now empty commercial and retail space.”

I hear you Tom. Much of Ontario has been hard hit and with the dollar soaring it could get a lot worse as manufacturers eat some of the losses on the exchange or close up shop.

If you were out here in Saskatchewan you would think we were all in the midst of freaking boom times though. Construction sites are really busy, skilled trades are in short supply and stores that sat empty following the credit crisis are being reborn under new management.

It is only when I read the news or the internet blogs and comments like yours that I get a picture of how dismal it is everywhere else.

Otherwise it is all Roses and Sunshine here.

#56 Duke on 05.29.11 at 10:57 pm

Maybe the reason the housing bubble in Canada and Australia hasn’t burst yet is because both nations are both net energy exporters. Because of that we can still expand our debt levels to what seems to be infinity and keep the real estate values goosed.

#57 phinny on 05.29.11 at 11:00 pm

I still don’t see what all the anger and fuss over the housing market taking awhile to correct, or vilifying Garth because the correction didn’t happen last week in some real estate apocalypse.

I think people are missing the point. This blog isn’t about waiting for a deal on a house when the correction INEVITABLY happens- it’s about investing money prudently and rationally.

So, does a million-dollar Vantown crackhouse sound like a prudent, sustainable, investment?

If you think so… go for it.

#58 Cognizant on 05.29.11 at 11:01 pm

“Those who had been riding the upward wave decide now is the time to get out. Those who thought the increase would be forever find their illusion destroyed abruptly, and they, also, respond to the newly revealed reality by selling or trying to sell. And thus the rule, supported by the experience of centuries: the speculative episode always ends not with a whimper but with a bang.”
— John Kenneth Galbraith writes in his book “A Short History of Financial Euphoria”

#59 Mister Obvious on 05.29.11 at 11:04 pm

What are we really saying when we argue over a ‘crash’ versus a ‘slow melt’? Is it not simply a disagreement over ‘exponential’ versus ‘linear’ decay in RE prices?

It it not really just a difference of opinion about the nature of the expected toboggan ride, not whether there will or will not be such a ride.

If prices fall by 40% in the next five years does it really matter the trajectory taken?

If you believe in the probability or a decline, the future of real estate will be equally dismal regardless of the rapidity of the event.

If you do not believe decline is probable then this blog will not be a happy place for you. Maybe watch Global instead.

#60 Sunny on 05.29.11 at 11:05 pm

It’s a changin’ in Vancouver!

I for one have noticed a lot of west side apartments sitting for a very long time on MLS and in the last 3 weeks a lot of reductions on those stale listings.

#61 Aussie Roy on 05.29.11 at 11:07 pm

Aussie Update

The TRUTH the whole truth and nothing but the truth.

THE lies being told about the property market drive us crazy. So it’s time for the truth, the whole truth and nothing but the truth.
Residential property values are falling right across the country and those falls will pick up as the year goes on.

It is frustrating to see all the “For Sale” signs, hear anecdotes of friends and relatives having to slash prices to get a buyer but then read real estate agent or media reports cherry-picking the increasingly rare “good news” sales. It gives a very false perspective of reality.

Louis Christopher’s independent property analysis group SQM Research has data on how much residential property values have fallen from their peaks across all capital cities so far this year and how much further those declines are set to go for the rest of this year.

We asked them to identify areas which are turning into property nightmares.

Aussie banks approach their “misky” moment by lowering mortgage rates and loan standards.

2 Bulls 2 Bears, where are house prices heading – (click on video top of page)

OH Please don’t burst our bubble – please.

QUICK look at the headline, says Australias biggest property spruiker. (pssst, don’t look at the other clearance rates)

#62 Jim on 05.29.11 at 11:08 pm

I think Garth is wrong. I am seeing the market die here in Vancouver West. I think Vancouver West real estate is about to fall off a cliff. I mean that April was the top.

#63 Cognizant on 05.29.11 at 11:11 pm

This is a city built for a million people – but no one lives here: The Mongolian metropolis thrust into the 21st Century in a storm of steel and concrete

#64 FOFOFOA on 05.29.11 at 11:12 pm

Garth did you mean a Bull Trap?

I still have love for this patient old dog…er blog.

#65 Forgot my Name on 05.29.11 at 11:18 pm

Speaking to a younger friend of mine recently. He is 24, out of University, has no money, yet he inquired about buying a town house in downtown Toronto that his brother was living in. The price it was selling for was $600,000. He approached TD and they told him that they would give him a mortgage as long as he comes up with a down payment of 10%.

They suggested that he get a loan or gift from his parents to get him started and offered him a mortgage rate of just over 3%.

Even he understood how crazy this sounded and was shocked that TD was actually going to give him a mortgage with no earnings, student debt and no job!

#66 palebird on 05.29.11 at 11:21 pm

35 BPOE ha ha ha Boston will wipe you up like a bad stain in the bathroom, same with your dirty real estate..

#67 Aussie Roy on 05.29.11 at 11:25 pm

Aussie Update

Which came first?

First, one of the things we’ve looked at is the link between rising and falling house prices and rising and falling unemployment.

As we noted recently, the position of U.S. house prices and unemployment was the opposite of what many assumed. The argument from Australia’s spruikers is that house prices can only fall if there is an external shock that leads to rising unemployment.

We showed you with this chart on 25 March, that the drop in U.S. house prices came before unemployment spiked:

No, it’s not outrageous bank profits that are the issue. It’s the risk taken by bankers to get them. When credit is cheap and credit growth expands—as it has been for most of the last 20 years—banks can grow profits simply by making more loans. This is how it came to pass that Australia’s retail banks own $1 trillion in mortgages.

Where is the risk in this? Well, the profitability of the banks is driven mainly by one single asset class. The risk is that all the price gains in that asset class are simply a function of credit growth. When the credit growth slows down or reverses, asset values will fall while liabilities (what you owe on the mortgage) will not.

“More than any other factor,” reports Matthew Drummond in today’s Australian Financial Review, “a series of housing booms is what has fuelled the growth in banks’ profits. Mortgages are banks’ single biggest asset class (including mortgages offshore they make up 65 per cent of total assets at Commonwealth Bank and Westpac, 55 per cent at ANZ and 50 per cent at National Australia Bank.)”

“House prices are now either falling or going nowhere,” Drummond adds. “The effect on Australia’s banks will be profound.”

#68 Hoof - Hearted on 05.29.11 at 11:30 pm

Sarah Palin
In leather and a Harley…

Should get Garth buying Alaska real estate

#69 BPOE on 05.29.11 at 11:32 pm

Sooooooo interest rates aren’t going up after all. All the doom and gloom from the naysayers but they just can’t admit they have been wrong for a long time now. It should be very clear now we are looking at low interest rates for decades to come. You will never see 5 years at 9% for many many decades if ever. No politician will raise interest rates because this could affect the CANADIAN owner who took out a mortgage. The government knows in key markets the Canadian will be mopped up by the strong international bids. Folks let’s stop focusing on Asia. West Vancouver for example has a very strong Middle East presence.
Year 2000 Buyer A buys a house in East Van for $250K now worth 1 million up 750,000 tax Free. Renter B same time frame rented the house for $2000 a month down a total of $240000 and owns NOTHING. Buyer A is on the way to paying off his mortgage while Renter B has only shame and disgrace. A fool or renter and his money are soon parted

#70 randman on 05.29.11 at 11:32 pm

Drove around Kelowna today….not so easy these days with the price of gas

Saw a lot of for sale signs up

Was up behind Shannon lake area and saw this nice newly built house overlooking westbank with a spectacular view…no idea the price but the sign outfront said…just reduced

Also talked to an insurance agent who was lamenting
that house sales had stagnated

Not very scientific but interesting never the less.

#71 Whistle punk on 05.29.11 at 11:33 pm

I have said this before but it will be a slow domino effect, it will go one person at a time or if something happens a group of people then back to one person at a time. Nobody will probably notice till later on holy crap what is happening.

Who wants to admit they had to claim bankruptsy ? People will try sweep their problem under the rug and try keep it a secret that they couldn’t afford their life style. They will make an excuse oh we wanted to down size, ya bullshit you went broke.

Many people are going to get a slap in the face pretty quick when things get really tight money wise. They can’t sell their house they are stuck.

Will be UGLY when things start to fail, a friend of mine said to me the other day it is 1982 all over again. I don’t remember 1982 I would have only been only 6 years old.

I do the happy dance that I never got into buying realestate. I have no worries of a mortage payment, no worries about a house that is dropping in value every month. Do I have credit card debt, yes I do but I’am paying that off. I’am a free man I don’t have a house shackeled to my leg.

#72 BigAl (Original) on 05.29.11 at 11:35 pm

Funny how so many on this blog “support [demand] tightening the mortgage rules” and yet completely ignore all of the leveraging done by the big players – futures, derivatives, etc. etc.

#73 Devore on 05.29.11 at 11:47 pm

#45 T.O. Bubble Boy

Wasn’t trying to counter, just pointing out that the picture is even worse than they propose, presumably to attract “investors”, who will be losing, best case scenario, hundreds every month, assuming they find a tenant. This is directly out of their pockets, and hits the bottom line. All they can do is hope for capital gains, and that’s just pure speculation. These are the best of the best?

#74 Frankie on 05.29.11 at 11:51 pm

Just wondering what wait will be longer….

The Toronto Maple Leafs win the cup or this “melt”?

Let me know….my jersey has holes in it.

#75 Gord In Vancouver on 05.29.11 at 11:57 pm

#35 BPOE

Prices set to soar as interest rates stall then fall.

Any credibility that you had left was zapped by that statement.

#76 Nostradamus Le Mad Vlad on 05.30.11 at 12:04 am

“Patience is a virtue, Virtue is a grace;
Both put together Make a very pretty face.
It’s why we’re doomed. At least the impatient ones.”

Ahhh yes, but how many lusty horny house-virgins have ever heard of patience being a virtue? Not too many, methinx ‘tho they are about to learn the hard way.

Is it not better to let those who completely bypassed Mom and Pop’s advice, not to jump in at the deep end until they could swim, live with the consequences of their own choices?

At some point, children become adults and when they do, are fully accountable for their own actions. A court of law has general standards for the differentiation.
#29 Crashing Debt Tide — Great and accurate post, comparing tsunamis of the natural lifecycles vs. manmade tsunamis.

The only question that remains is will a tsunami swamp us, or will we die from the Chinese water torture?
BoE Guess who runs it? You’re right! Plus Bullion Disconnected from reality. China What would happen if China collapsed first, then Japan and thus wouldn’t buy any more US debt? DSK More to this than the m$m lets on (obviously). Finances Headline says it all. Socialism One and Socialism Two. In either case, the public picks up the tab.

Typhoon Songda weakening.

Global Revolution by winter (forecast). But if people use non-violent resistance, then TPTB cannot do anything at all. Axis of Evil US, UK and NATO try to finish Gadaafi off. Encircling Russia with US bases. Another provocation.

‘Net Censorship via Cookie Monster (EU), and Gas Prices Big Oil will keep prices artificially high until a carbonazi GW tax is brought in world-wide. Big Smoke Same as big oil, big pharma, big Monsanto, etc. and Big Pharma Two.

Concrete and Steel Nice ZZ Top number, it has also built a 12-km. empty city in Mongolia. Texas Would be curious to see the end result if Texas secedes.

Vaccines No one knows what they are doing anymore. Drugged beyond belief? And 4:56 clip on fluoride.

2:20 clip Here Comes The Sun, by George Harrison, What Mike The Engineer said earlier — huge solar winds / blasts. Contemplation Fukushima questions, but no answers. NWO?

#77 Brit on 05.30.11 at 12:12 am

An abbotsford realtor thinks the drop in sales was because people were “distracted” with the federal election. Hah! That’s reaching.

#78 Don D'Ercole on 05.30.11 at 12:24 am

My what a diff 5 years makes… and my abbotsford townhouse, like chilliwack is slowly creeping downward in price. Where is the bottom? I say the Gov’t and media will want a slow death as to not scare the masses. We don’t want a panic so everyone lie! Garth nailed it…so did the book “crash proof” in 2006. Just remember, for the next ten years, cash is king… not a mortgage on a depreciating property. What are you holding these days?

#79 tran, Calgary on 05.30.11 at 12:28 am

When Marc speaks, the world listens……

#80 Barry in Pickering on 05.30.11 at 12:39 am

The likely scenario is a correction in prices this year – a classic bear trap. Impatient house hornies will jump in thinking they’ve scored a bargain at 15% less than the peak, only to despair at what comes next – several years of steadily eroding values. As house prices revert to their historic mean, adjusted for inflation and a sloth economy, the true bottom will be far lower.

You’ve used the term ‘bear trap’ incorrectly. A bear trap is when the market falls briefly, but is proceeded and will be followed by a bull market. This is opposite to the scenario that you describe above.

#81 Sir Wagsalot on 05.30.11 at 12:46 am

Not all Boomers will sell of course, since some will reverse-mortgage (those who hate their kids) and others will try to tough it out.
If enough people see the writing on the wall – in that they’ll get way less for their houses than they thought:
– people are greedy (as you’ve often said)
– won’t this be an opportune time for the banks to make money off them via the reverse-mortgage option.
– offering opportunities (for those who made poor investing choices).
– starting a whole new wave of thinking amongst these hords of wrinklies?

Would this then not effect the drop in house prices?

They get to keep their main assest, live in it, and hopefully make it to their end days?

Thanks for your reply and advice. Been reading your webpage for just about 2 years and bought your latest book.

#82 Junius on 05.30.11 at 12:47 am

#38 BPOE,

If anything you said were correct you wouldn’t bother posting on this Blog. You would be out selling homes to all of your HAMsters. Fear and greed is all you have. Logical arguments, not so much.

#83 Nobody special on 05.30.11 at 12:52 am

Saskatoon is starting to feel it now aswell. Quote from one of our realators “The final week of May proved to be a bit of a bust”

#84 Junius on 05.30.11 at 12:54 am

#40 Smoking Man,

You said, “As soon as the bankers sense the real estate beotch is done, they and the media will pump RE like there is no tomorrow.”

Perhaps you have missed the news for the past 5 years and every night here in BC since the dawn of time. All the MSM does is pump Real Estate. Find me one story on the news or in print that discusses the possibility of a bubble and 5 will follow the next day dismissing it.

The fact is that most people want to believe that the market will not go down. As has been mentioned here many times before the prevailing mental state is “Cognitive Dissonance” when it comes to Real Estate. Every positive story drowns out the negative. This is why Real Estate always overshoots so much on the high and the low.

#85 Hoof - Hearted on 05.30.11 at 12:55 am

The Truth Behind the BP Oil Disaster!

#86 Junius on 05.30.11 at 12:58 am

#45 T.O. Bubble Boy,

You said, “This seems like the entire world is bad at math.”

Amen. The really strange part right now is people are prepared to lose money renting out their investment properties on the belief that the equity is increasing enough to off set the sunk costs. When people in Toronto figure out that their “asset” is actually losing value AND costing them money they will panic. This is the crash that is coming in this market segment.

#87 Kaganovich on 05.30.11 at 12:58 am

Given the odd allusion to the Automatic Earth prediction of 80 to 90% drops in house prices from their peaks,

“Many people claim Stoneleigh and I must be crazy, and doomers and all that, for predicting an 80%+ drop in real estate values, but we in turn can’t seem to understand why home prices would fall “only” 20% from here, or why they would fall “just” 40%, as Mish suggested for instance. We think that more than 20% is in the cards just because of the bubble coming back to earth; we think 40% is certain because of the bubble bursting, and we think 80%+ will then happen because the bursting bubble will take the entire financial system down with it. Pretty simple really.”

I think that it is too early to tell whether that particular call is foolish or not given state of the US housing market lately. Shadow inventories, shitty jobs being created (if any at all) while better paying ones going extinct, and all the rest of the deflationary conditions now enveloping much of the world, they may not be as ‘off’ as many here seem to believe they are. We just have to be patient. Vegas and Phoenix are down 50 or 60% roughly already, and it looks like QE and other deferral strategies are ending. So who knows right now? We should have a better idea by 2020…but it’s too early to tell at this point. To me the more pertinent question is who will be left holding the bag after the inevitable mean reversion and overshooting occurs…???

#88 Junius on 05.30.11 at 1:04 am

#38 BPOE,

You said, “I’ve been stating this for quite sometime now. Any Canadians (the weak bids) defaulting on their mortgages will be mopped up by the international investors (strong bids).”

You are such a con artist. Since we know lots of Canadians can’t sell their homes at the current list prices we know you are a lying sack of bull crap.

Are you prepared to put your money where your mouth is (or type) is? Why don’t you offer to buy all Canadian distressed properties for “market value” if you are so confident? If there are so many of your HAMsters on the way you can’t lose. Go ahead con man. Make my year.

#89 realpaul on 05.30.11 at 2:06 am

World bodies urging Carney to ‘neutralize’ rates to 4.5%. Thats 450% higher than today’s 1%. That may come as a shock to most FTB’s who thought rates would stay down forever. The fact is that our government is burying itself in debt trying to keep the ZIRP running at full throttle. The OECD doesn’t want Canada to end up like the PIIGS………thats why it has warned Canada FOUR TIMES in the past 18 months that every measure of economic health is swirling towards a big freaking ka-boom !!

Higher rates are going to be an automatic disaster for thousands……CHMC will dissolve under the acid bath of toxic debt. Taxpayers are screwed……and for what? But…….Flaherty and the girls in Ottawa can’t keep spinning the zirp without busting the entire country……Who will be the first sacrificial lamb? FTB’s……Developers…..Speculators…….the fun is just about over.

#90 Bill Gable on 05.30.11 at 2:24 am

Is BPOE really Joseph Stalin Robertson our Castro like Vancouver mayor? He’s in about the same brain development stage. Early gestational?
Oh, and not everyone could give two hoots about the NHL Vancouver tuna. Overpriced, knuckle staggers. They’d fit right in the PC caucus.

#91 TheBigLebowski on 05.30.11 at 2:32 am

GREECE: Shocking New Bailout Conditions Mean The End Of National Sovereignty

.First over extend a country, and then buy it up for pennies on the dollar. The IMF was set up as a looting operation. That is why debt worldwide has been allowed to become so toxic by governments. Similar to bankrupting a business and then having a fire sale to benefit private banking interests. Welcome to the new economy.

#92 Aussie Roy on 05.30.11 at 3:00 am

Couldn’t resist this comment from the article below, the comments sections in most articles are getting, well, lets just say interesting.

“Spot the ‘hero’ investor – he’s read all the books (‘0 to 100 properties in 5 years’) and thinks aussie housing is his ticket to never ending wealth.

He has all the buzz words, ‘its demographics man’, ‘leverage’, ‘equity’, ‘supply constraints and demand exploding’, ‘negative equity’ and best of all ‘CAPITAL GROWTH’ .

In truth he has been lucky – he has come in at the tail end of the greatest run-up in Housing in Western Society – where average prices went from 3-4 times average income to 10 times average income.

This has busted the economies of other western countries such as US, UK, Ire, Spain etc. but Australia is different as the resources boom will save all..ignoring the fact that the ‘wealth effect’ through increasing house prices has fuelled a consumption based economy in the last 10 years.

He’s too dum to realise that this is the beginning of the end of that period but he believes in his own investment prowess so much, and it is bound up in his ego so much, that he will never admit to being lucky and will hold on all the way down the way through the downturn until reality dawns and house prices have fallen 25% – he will then try to sell – all the while he is losing thousands per year and any equity he has built up is eliminated”.

#93 West Coast on 05.30.11 at 3:36 am

What amazes me most about Canada is our profound naivity. We simply FEEL that people in general will act in the rational best interests of our country. The spectacular naivity comes into play when we extend this FEELING to the powerful. We simply assume that TPTB in Canada would never f*#k us over for a bit of cash.

Start paying attention to that throbbing painful sensation coming from your a55 it is trying to tell you something.

#94 maria on 05.30.11 at 3:51 am

Hi, I am watching the number of house on the market in Calgary on the site
According to that site – in 4 days – May 26 to May 30, there are the following changes in no. of houses on the market
All residential +3129 houses / 1.25% increase
houses priced 0-200k = +423 /0.61% increase
houses priced 200-400k = +1382 /1.28% increase
houses priced 400-600k = +377 / 0.96% increase
houses priced 600-800k = +326 /2.15% increase
houses priced 800-1000k = +7 /4.79% increase
houses priced 1000-1000k = +3 /1.67% increase
Does that mean anything? For me a 1.25% increase in just 4 days of houses on the market looks like a lot.
But I am not sure how reliable the data on is. Or if the numbers are just influenced by the start of a nicer weather. Any thoughts?
I am gonna follow this on longer term of course…4 days might not mean much but…still, thought I would share. Maybe some other people are watching the numbers for other cities?

#95 SmarterThanYouLook on 05.30.11 at 5:11 am

First, determining the direction of a market based on demographics has never worked. Proponents believe the system works and attempt to correlate the economy with census data. The most spectacular failure of this method is Harvey Dent who used this method to foretell the infamous 40k DOW, then switched gears after the massive 2008 recession to the other side of the coin, only to watch helplessly as markets sprang violently to the upside from 2009 to the present. There is a market for demographic-based prediction because it is an easy sell and everybody can relate to their own generation as well as the ones adjacent to them.

Second, despite all the hypersensitive posters to mortgage rates, sorry to say, but short rates are going nowhere fast. In fact, 4 of the big banks have recently lowered rates here:

Government bond yields continue to get crushed in the face of massive demand as society (some represented here) fear the coming of financial armageddon. Carney will also not raise rates despite all the predictions to the contrary. In fact, he may delay them until the end of this year (if he does anything at all).

Predictably, as these events unfolded, they are conveniently ignored and discarded as unimportant. Amazing that if the data supports one’s views how important they become and when the information is unpalatable how similarly unimportant they are.

Real estate prices will continue to rachet higher despite all the supposed ‘support pillars’ which are ‘crumbling’. They have been crumbling for a long long time.

#96 SmarterThanYouLook on 05.30.11 at 5:13 am

#42 Bolo

Some of us have been ‘paying attention’ for a number of years now. Nothing. Welcome newbie.

#97 Genghis on 05.30.11 at 5:37 am

According to Derek Burleton, deputy chief economist at Toronto-Dominion Bank the party will continue as long as rates remain low.

Hey, nobody has heard of this guy, but is an economist at a big bank, so he must know what he is talking about.

Unfortunately it appears that many Canadians are under this delusion.

The BMO Capital Markets chief economist is quoted basically echoing the concerns stated by RBC regarding the Vancouver market.

#98 BoomerBoy on 05.30.11 at 5:53 am

“The likely scenario is a correction in prices this year – a classic bear trap. Impatient house hornies will jump in thinking they’ve scored a bargain at 15% less than the peak…” Garth.

To be clear, so that there is no ambiguity. Are you predicting a 15% drop in real estate prices this year?

#99 SMOKING MAN on 05.30.11 at 5:55 am

A new bump on Mark Carney’s road to higher rates

Looks like the real estate crash is put on hold yet again…

#100 TurnerNation on 05.30.11 at 6:01 am

15 JohnnyBGood on 05.29.11 at 8:55 pm

That’s a great point. If banks are now lending downpayments to those who cannot afford, then who else is left to buy? If broke people can purchase a house these days, it means everyone else has bought in already.
Kind of like the retail fools who were jumping into Silver at $45 – the housing market, too, requires a steady stream of retail suckers.

Related: who is buying Vancouver bungs for 1.5 mill, is it savvy professional developers, or the last wave of retail speculators (from overseas no less as the local market is tapped out). I think we know the answer.

#101 House on 05.30.11 at 6:45 am

I’m not worried about my idiot brother-in law. I am worried about my idiot governor of the Bank of Canada leaving rates low until 2012 to prop up a political party.

#102 Willa on 05.30.11 at 7:18 am

What happens if an “old fart” couple take out a reverse mortgage in their retirement, then the housing prices drop to below the remaining value of their house, and then they die? That leaves a debt on the value of the house.

I’m assuming the debt dies with the couple, and the bank doesn’t get paid back.

So then why would banks give reverse mortgages to old couples?

Reverse mortgages are just that – mortgages. They do not die on their own, but need to be repaid. Interest payments are not made by the borrowers, yet accrue and are added onto the principal amount owing. When a house is sold, the reverse mortgage is payable in full, which means in a falling housing market there could be an extra amount owing. When you die, the reverse mortgage is a debt against the estate and cannot be avoided. This is why it’s a great strategy, as I said, for people who hate their children. — Garth

#103 Dude55 on 05.30.11 at 7:23 am

#8 Hovering
You should be shot…any chance the dog was abused when it finally did come in? Dogs are totally loyal to those they love…apparently he wasn’t…for good reason I’m sure.

#104 detalumis on 05.30.11 at 8:19 am

More boomer bashing. I live in a 1960 suburb near Toronto and not only are the boomers not selling any time soon but their parents still live in their homes at 80+; none of them seem to sell until they are carted off in a box. Boomers spanned an almost 20 year age range. I live in a 1,200 square foot bungalow not a mini mansion, was never profligate, and at age 50 I doubt I will move for another 30 years. If some 25 year old wants to wait until they are 55 to buy my house they are more than welcome to do so.

I also suggest there are worse things than eating KD to pay off your house. Where you come off saying we were all wastrels is beyond me. I don’t know any 25 year old who would like to live the way I did at that age. I basically lived like a 50 year old does today, no clubs, no vacations, no nice clothes, no nail salons, no fancy wedding, hell not even take out pizza. My life was just work and sleep, pay off the house and buy bank stocks. You must have lived in a completely different circle than I did. The only ones I know that are not going to be okay financially are those that experienced adversity including multiple job downsizing and such, something that their parents never had to experience.

You sound like one fun guy. — Garth

#105 BrianT on 05.30.11 at 8:29 am

#102Garth-Last time I checked your fellow taxpayers eat any loss on a CMHC reverse mortgage, not your estate. It is a sweet deal that I expect will be promoted heavily by the fed grifters down the road.

Reverse mortgages are not necessarily CMHC insured as the homeowner can access only 30% or less of equity at the time of borrowing. Reference. — Garth

#106 BoomerBoy on 05.30.11 at 8:39 am

For the record. With a reverse mortgage in Canada, the loan is guaranteed never to exceed the fair market value of your home.

Quite so. 30% equity loan today = 100% of equity tomorrow, plus legals and attendant costs, all at fat loan rates. This is one bad strategy.– Garth

#107 Lisa on 05.30.11 at 8:47 am

Most Canadians are in the market as homeowners. They are literally locked in, all money tied up. Interesting scenario. It’s worth the wait on the sidelines, if only as a hedge position. And there is no shame in renting. In the end, those on the fence hold all the cards.

#108 Sid on 05.30.11 at 8:48 am

so what happens in 5 years when your mortgage is up for renewal and you have less than 10 percent equity?
Do you have to pay cmhc again, do you need to go through the financing ordeal (proving income, credit, etc) or is the mortgage automaticall renewed?

#109 Mikey the Realtor on 05.30.11 at 9:02 am

SMOKING MAN, puff puff pass, brother. I agree that the lemmings will follow the media and banks right off the cliff. Even with the media reporting some bearishness the frenzy still continues.

As for rates, no point of beating a dead horse. Rates will remain low for YEARS. Carney may raise it 25 basis points this year just to say that he did as he promised. A raise that size is pointless. Governments all around the world destroyed their economies will low rates and now they are stuck between a rock and a hard place. Get ready for the explosion of a life time, Van and TO are going up another 30% in the next 2 years. Get in or be priced out forever!!

#110 Dark Sad Monster Bunny on 05.30.11 at 9:21 am

52 HH – the funny thing there is the original price is about $10K per lot raw land cost – a good deal.

#111 allister on 05.30.11 at 9:31 am

#50 Utopia – so why couldn’t the land registry office show historical home pricing, or allow someone else to access the info to build a site? – they have the info

#112 Live Under Your Means on 05.30.11 at 10:15 am

OT – If you need a good laugh watch the following.

#113 Toon Town Boomer on 05.30.11 at 10:20 am

#55 Utopia & #83 Nobody Special
I don’t think Saskatoon is really that rosie. There are lots of houses for sale and lots of houses that were on the market last year coming up again. I been watching Kijiji for rental homes as well and i see a lot of restrictions put on rental properties. I think this is due to the fact that these rental homes were/are intended for sale, but that is not happening for the Sellers (unitentional Landlords now). Many folks claim they are working two jobs just to try and make ends meet. I think the signs of stress are here , but just being masked for now. Any thoughts?

#114 Cognizant on 05.30.11 at 10:21 am

#111 Allister
Land registrar has sales price info? I doubt it. I wonder if they have even registered mortgage claims on the title correctly?
We can’t investigate because land titles in Torrens jurisdictions of Canada are not publicly available. The crown owns and holds the titles.

#115 Al on 05.30.11 at 10:29 am

Several “offers will be reviewed at 7pm on x/x/2011” expired with no offers in the previously hot Thornhill area. Market has slowed down.

#116 Daisy Mae on 05.30.11 at 10:31 am

Kelowna — quite a few ‘new prices’ and ‘court ordered’ listings. But, at the same time, alot of sellers are firm with their prices…and the listings stagnate.

#117 Kent on 05.30.11 at 10:31 am

This is more in relation to yesterday’s post, but where do all those Asia’s sitting on cash from around the world put their money? My guess is many will wait until our RE starts to tank and buy the country up “on-sale”. We can then move into those Chinese ghost cities to feed their plants. Guess the commies did end up selling us the rope to hang ourselves with.

#118 PostCarbon on 05.30.11 at 10:32 am

I introduce the readers of this blog to the concept of “sticky prices,” the reluctance of sellers to drop their asking price because they believe their house is worth what they are asking for, despite no offers and declining sales prices around them. Asking prices generally drop much slower than they rise. That is a reflection of human nature. Eventually the sales prices decline and sellers accept the inevitable. It is painful, as we discovered in selling our home in Denver, Colorado.

#119 jane54 on 05.30.11 at 10:33 am

The reality of middle class folk with little debts and lots of assets, stopping the shopping is an established trend here in Britain. The academics call it Voluntary Simplicity.

People who could shop, choose not too. They think that they have enough stuff and are actually more interested in de-cluttering then buying more. It is a spin-off from the established re-cycling movement.

Should it become mainstream then our economic system which is based on conspicuous consumer consumption will get a real knock!

#120 Junius on 05.30.11 at 10:40 am

#109 Mick,

You said, “Get ready for the explosion of a life time, Van and TO are going up another 30% in the next 2 years. Get in or be priced out forever!!”

Oh please. Can you come up with something that actually justifies your predictable prediction. Just more of the usual nonsense.

30% down maybe. Up – forget it.

#121 disciple on 05.30.11 at 10:42 am

Seriously grave errors start off when we make fatal logical assumptions on matters we have not researched. Granted, there are many willfully ignorant people out there among us, but always there arise those that have the courage to seek out the truth by first letting go of those common assumptions that act as sentinels for maintaining ignorance. Remember that the battle is for your mind.

Much of what you have “learned” all your lives is simply wrong. The hardest thing to “unlearn” is the notion that you couldn’t possibly have been mistaken for decades. One such thing is “property values always go up”… In speaking with others about the imminent multi-market segment collapse, I believe that this belief is the single greatest assumption held by virtually everyone. Once this basic and false assumption loses its lustre, mass psychology will do the rest of the damage. It’s all in the mind, we share this mind, we are all of us different aspects of this mind, the mind of Consciousness that is experiencing Itself through us.

#122 Junius on 05.30.11 at 10:53 am

#95 Smarterthanyoulook,

I don’t find either of your arguments very convincing.

Demographics do matter in the long term. You can’t take a 2 year period like 2008-2009 with a market crash and unprecedented stimulus and use that as a guide. Dent is certainly correct in the overall demographic shift which meant that as the boomers reached their peak earning years in the 90s and into the 2000s they would be spending money and paying taxes. Furthermore as they retire there will be a drain on tax revenue and an increased demand on services. I don’t see how this would be denied.

In regards to interest rates there are 2 points. First of all, the market will continue to go down with rates at these historical levels. They will no longer have the impact they have had.

However the important point is that they are going up. Not next week and not next month. However when we get into the rising cycle we will see them going up for years to come. This is the historic trend.

If you are taking out a mortgage it will most likely be for 25 years or more. It means that the vast majority of time you hold that mortgage the rates will be higher than now and perhaps substantially higher. Not only that but rising rates will cut the value of the property and possibly mean you have a home worth less than you bought it for with a mortgage that is getting more expensive all the time.

You, Smoking Man, Mick and BPOE may think people are day trading on interest rates but you are the only ones.

#123 disciple on 05.30.11 at 10:54 am

Common assumption/logical fallacy: Gov’ts do whatever they can to stay in power. Hmmm….For what? So they can distribute wealth to their friends, or according to whatever political belief they have? When was the last time you’ve seen this in actual practice? No, it’s always about deficits, and how the central private banking families are actually DICTATING everything from trade policy to austerity cuts at municipal levels.

It’s a game, a stage play, and the actors get paid well to do their dance. It’s not about “staying in power”. That role has been long ago been taken by other forces, and perfected to such an extent that your real rulers have become virtually invisible, unless you know where to look, and that begins in your own heart.

#124 Utopia on 05.30.11 at 10:54 am

#111 allister to #50 Utopia

“So why couldn’t the land registry office show historical home pricing, or allow someone else to access the info to build a site? – they have the info”
And that is the bait, is it not? No doubt the answer you want to hear is that I expect the information to be provided for free.

“Free” being the key word in the sentence.

And then your argument will be that since the cartel has collected the information it should have some rights to how that data is disseminated. There should therefore be a cost to the public for access to information that is of public and national interest.


The land registry does provide information of course. It is slow and difficult to access. You can get what you want by asking very specific questions and you will pay for each request.

That is not totally acceptable in meeting the needs of information transparency with timely access though. That is just a hindrance to the free-flow of information required by a modern Western and open economy such as ours. Obviously, where computer records abound in a fast paced world this information should be much more readily available. And at a moments notice to ensure this system or ours is properly lubricated.

A click away is good.

So should we pay? My thinking is that since almost all of us (home buyers and sellers alike) participate in the market many times in our lives, that we have already earned the right to have free unfettered access to the records of housing sales, prices, listings and all the correlated data.

It is also my opinion that we have earned an entitlement to full access on the basis of our participation in the market itself. Yes, you might get the information you desire through civic records in specific towns and cities for a fee but open free access is preferred. You should be able to get at all the info without even leaving your own community.

As a home buyer you are already paying for this right through your participation in the market. As a seller who has provided income in the form of Realtor commissions and service charges you have also paid for the data once already. You are in fact a part owner of it too.

Why should you pay again?

That is just speaking as a private person though. From a business perspective I support the break-up of the cartels as I am not in favor of monopoly control where it impedes employment opportunities. These practices, including those protected by TREB always lead to anti-competitive behavior and raise costs for everyone. Housing costs are already high enough.

So break up the TREB monopoly. That will set a national precedent and open up records everywhere and I am very much in favour of that.

#125 vreaa on 05.30.11 at 11:03 am

Misallocation Of Human Capital During Speculative Bubbles –
“What do you call societies that depart from meritocracy? What tends to happen to them in the long term?”

[A very eloquent response to the suggestion that prospective buyers in Vancouver should not be ‘elitist’, but should accept and buy the very modest accommodations that they can currently afford.]

#126 BoomerBoy on 05.30.11 at 11:15 am

Well, how about some good news. Latest real GDP report is out and Canada enjoyed a 3.9% annualized increase in the first quarter. In addition, business capital spending showed solid momentum, advancing by about 10 per cent in annualized terms.

More pressure on Carney. — Garth

#127 BROMANCE on 05.30.11 at 11:21 am

This what I’ve been telling equity bears for over 2 years: have respect for time. You may eventually be right, but not tomorrow. Pick a time or price, but not both. It goes for everyone in today’s World.

#128 Daystar on 05.30.11 at 11:39 am

The U.S. housing slide continues…

#129 Utopia on 05.30.11 at 11:39 am

“Six of ten people are uncomfortable with their level of indebtedness, and 30% are losing sleep over it. Worse, 35% say they’ll be cutting back on spending to try to cope – which is how recessions start and house values crumble” ~~Garth Turner

Best line of the day. Lets repeat it. That is “how recessions start and house values crumble”. If there is one single aspect of the current high level of debt amongst Canadians and one single issue that keeps me up at night worrying about our economy, it is the prospect of a major downdraft in consumption as debtors pull in their necks and stop spending while they are simultaneously being assaulted by rising food and energy costs.

A decline in consumption might be particularly acute in the home building sector as supply has now exceeded demand. The prospect of rising unemployment in the housing sector is naturally a serious concern as it weighs on pretty much everything else.

We should all be concerned. This is where the first cracks in our economy will appear absent interest rate hikes. Personal debt is simply too high and spending is now heading into decline as a result.

#130 SwampLily on 05.30.11 at 11:40 am

Victoria and area aren’t doing so well. Many restaurants and shops we’ve always gone to are now closed down, just gone. Everywhere you look there are empty commercial spaces, even high-tourist areas in downtown and around Market Square and the Empress have papered windows and “for lease” signs.
Took our daughter to the Ocean Discovery place in Sidney yesterday afternoon, and the parking lot was empty. When we paid to go in, I said, “slow day today” and the woman said, “very slow.” Earlier, we ate lunch (at 12:05 on a Sunday afternoon) at our favorite restaurant with four other customers. People don’t seem to be spending money around here any more.

#131 debtified on 05.30.11 at 11:52 am

Aussie Roy – Thank you for the updates on Australia. My cousin and her husband have sold all of the houses they owned except for the one they live in. Good thing because they are just about to retire and virtually all of their assets were in real estate.

Crazy – Good one. I suppose you got the reactions you were looking for. I used to be very defensive about being bearish on the real estate. Now, if I hear people still saying that real estate is a good investment, I just ignore them. They are beyond reasons at this point – they wouldn’t know bad even if it hits them on their privates. Apparently, you still got lots of people reacting to your provocation.

Fellow Bears – We are right. Just chill. No need to engage (indulge) the bulls and the delusional. Yes, house prices will be going down, if they haven’t already. But if you are a vulture, you may have to wait a little (or a while depending on your patience). There are no winners. All of us will feel the pain. The real estate correction will not happen in isolation from the overall economy.

Find ways to have fun, though. The correction will take a while to fully materialize and be done with. Japan’s real estate pain has been going on for over a decade. The US is approaching half a decade. It’s not going to be quick and painless.

Mr. Carney – History will remember you as a fool. Just like Greenspan. Maybe tomorrow you’ will finally grow some cohones. But then again, I’d be a greater fool to really believe that you ever will.

#132 Dude55 on 05.30.11 at 12:00 pm

#108 Sid
If I’m not mistaken the mortgage is NOT automatically renewed. You must qualify again, proving your income (and debt) can carry the mortgage – at the new (higher) rate.

#133 dddd on 05.30.11 at 12:08 pm

#90 Bill Gable on 05.30.11 at 2:24 am

Oh, and not everyone could give two hoots about the NHL Vancouver tuna. Overpriced, knuckle staggers. They’d fit right in the PC caucus.
easy there partner, van is in spasams of joy over the hockey situation – is a huge societal positive – better than the oly imo. let us have our harmless fun and enjoyment of the FREE games available on cbc . to see live, well thats the free market for you, just like van houses its THE premium product out here. BOTH the sedins other 2 brothers are prof engineers, they likely would have followed if not for hockey so who’s the knuckledragger – players represent all levels of the iq dist curve.

and btw east van (comm dr) remains hot to the touch – nice,mid level, and terardown sfh all continue selling very fast – near zero rental vacancy – plenty of const action as teardowns meet their destiny. the new 7-800k duplexes are slower to go this is the only soft spot, but they are way overpriced wrt land value when you can get a whole lot for almost the same price with a beater house. no ham here. low status area in the big picture.

pricing remains nuts but the new buyers seem to have no prob with prices(most make v good coin) and spend huge on upgrades once in.

re the west van piece the other day – i was quite suprized to see this as that very day i had driven along the lower, ultra premium areas of wv and was SHOCKED by the huge number of for sale signs – mabe 1 in 6 houses it seemed had signs , easily 10x the rate in van city. the news report seemed to only focus on the 1-1.5m houses (this is the very, very bottom of this mkt).
these places at 3-5m were hundreds deep on a 45 min drive.

#134 Bolo on 05.30.11 at 12:10 pm

# 96

It has already started.
I’m seeing it first hand in parts of Markham, RH and Stouffville.
Houses just sitting on the market 3+ months.
Some have taken it off the market or forced to lower asking.
Thanks for the warm welcome. Now where’s my cake? =)

#135 Pr on 05.30.11 at 12:24 pm

The more influential factor is debt… Yes and at 8.5% for 5 years mortgages witch is the historic norm for the last 35 years, real estate will be see much differently than today.

#136 Ben on 05.30.11 at 12:37 pm

Household Saving Rates per country

Ha ha… the chart only goes from 1990 to 2009 but notice how Canada has deteriorated.
It’s probably even worse now as your average Canuck has totally gorged himself on debt.

#137 Atb on 05.30.11 at 12:45 pm

Live in West Van Housing market here is on fire, mostly fed by asian buyers. Most of the people we know view this as a great opportunity to dump their shacks at 3-5 times what they paid less than 10 years ago, moving into rentals, Kelowna/Okanagan, or across the channel to Vancouver Island or the Sunshine Coast. Nature of the community is already starting to change noticeably in places like Ambleside, undergoing the process of rapid “Asianification” similar to what happened in Van West. While this process nominally adds to the diversity of this previously quite homogeneous community, in practice it results into a less cohesive community, detracting from its previous attractiveness. Thus locals are bailing out en masse, recognizing that the community that they grew up in is rapidly changing for the worse, becoming essentially a pied a terre for rich asians with no deep commitments or roots in the area, speculating on land values driven by new waves of absent asian property owners.

#138 Kevin on 05.30.11 at 12:49 pm


“World bodies urging Carney to ‘neutralize’ rates to 4.5%. Thats 450% higher than today’s 1%.”

Small math nitpick: It’s actually only 350% higher. Look at it this way – if they doubled to 2% from 1%, that would be a 100% increase. If they stayed the same, it’d be a 0% increase.

#139 disciple on 05.30.11 at 12:51 pm

I just came back from Tim Horton’s for a quick bite, and have a good news story:

I was about to enter the Drive-Thru when I noticed a beat-up old contractor van (white Ford E-350 I think) just pulling up about to enter it from a different angle but clearly behind me in the arrival. I thought I would just let him go through first, I mean I wasn’t in a hurry and I figured he had more of time restraint than me knowing how hard it is to earn a living these days actually doing physical labour with technology (i.e. real money). Anyways, I ended up discovering to my absolute shock that he had paid for my $5.14 chicken salad combo! I quickly glanced over to my right and saw that his van was entering onto the roadway to turn right and when I could see his front windshield, I shouted to him and what looked like his son in the front seat and gave ’em a wave, and they waved back. Unbelievable! That was a man who had found inner peace. That was Consciousness (or insert here whatever Force you believe in) telling me that I still have much to learn…
Humbly yours,

#140 Devore on 05.30.11 at 12:53 pm

#86 Junius

The really strange part right now is people are prepared to lose money renting out their investment properties on the belief that the equity is increasing enough to off set the sunk costs.

Back when I was bad at math, I owned a condo. The monthly nut was $1850, plus $200 strata fee, plus $150 property tax. $2200 a month. Then a special assessment came, $8600. Roof’s leaking. Oops. Contingency fund woefully inadequate, even though work has been planned for years. Building coming out of 10 year warranties.

Could have rented same unit for $1400-$1500, depending on finishes, as could be seen on Craigslist quite often. Every month I “owned” this place I was falling behind $600. It felt worse. Just to break even on my housing costs, it would have to appreciate by $600 every month. Plus agent’s commission. It didn’t.

If this was an “investment” I was expecting to make money on, I would be crossing my fingers and waking up in a sweat every night.

#141 Jon in Cowtown on 05.30.11 at 12:57 pm

Good post, it is easy to forget that despite our desire to see rapid evidence of the meltdown in full progress, having anticipated it, all too often reality is a little slower. I remember the last Asian property boom in BC, the flight from Hong Kong in 97. It took a good 2 – 3 years before the larger masses came to recognize that the bloom had gone off the rose.

Bear in mind old Schopenhauer: “Every truth passes through three stages before it is recognized. In the first it is ridiculed, in the second it is opposed, in the third it is regarded as self evident.” We’re making some progress I’d say, at least a major market correction isn’t being ridiculed anymore.

#142 Devore on 05.30.11 at 1:03 pm

#91 TheBigLebowski

The entire IMF MO is so farcical, you wouldn’t believe it if someone told you, had you not seen it with your own eyes.

So the IMF comes to a country whose economy and currency has cratered due to debt it cannot service, lends it MORE money, then forces privatization (asset liquidation to pay off creditors), then holds the hammer over the government and people bleeding their country dry to “restructure” the debt.

Their track record is dismal.

Here is what DOES work. Country goes bankrupt, creditors take a bath, everyone starts over. Allowing investors, banks, businesses, countries to fail is the only way to enforce fiscal responsibility on the sovereigns and risk management on the investors.

#143 Devore on 05.30.11 at 1:16 pm

#108 Sid

so what happens in 5 years when your mortgage is up for renewal and you have less than 10 percent equity?

If you can afford to keep paying it, the bank will be happy to let you. But if you want to refinance or go across the street, it may be difficult.

#144 Live Under Your Means on 05.30.11 at 1:39 pm

Another good one.

#145 S on 05.30.11 at 1:51 pm

#18 The Original Dave on 05.29.11 at 9:01 pm
#116 Daisy Mae on 05.30.11 at 10:31 am

In Okanagan sellers await the return to the normal pricing levels. Their normal? Think 2006 and 2007… I guess thinking a little bit further back than that would be too painful. How bad are things really? One small South Okanagan municipality, apparently in a bid to live up to its moniker as “The Place To Stay Forever” is currently trying to attract a prison to the city.

#146 Sunny on 05.30.11 at 2:02 pm

I’d bail as well, this is a chance in a lifetime. I bet folks in Richmond that didn’t bail 3 months ago are totally kicking themselves now.

Live in West Van Housing market here is on fire, mostly fed by asian buyers. Most of the people we know view this as a great opportunity to dump their shacks at 3-5 times what they paid less than 10 years ago, moving into rentals, Kelowna/Okanagan, or across the channel to Vancouver Island or the Sunshine Coast. Nature of the community is already starting to change noticeably in places like Ambleside, undergoing the process of rapid “Asianification” similar to what happened in Van West. While this process nominally adds to the diversity of this previously quite homogeneous community, in practice it results into a less cohesive community, detracting from its previous attractiveness. Thus locals are bailing out en masse, recognizing that the community that they grew up in is rapidly changing for the worse, becoming essentially a pied a terre for rich asians with no deep commitments or roots in the area, speculating on land values driven by new waves of absent asian property owners.

#147 Edward on 05.30.11 at 2:23 pm

#126 BoomerBoy

That 3.9% is commodities and RE; adding fuel to the fire; will be an interesting correction (or long, slow, drop) once Canada’s cyclopean single sector-single customer economy (with a huge dash of speculation) meets different world demand.

#148 jess on 05.30.11 at 2:30 pm

gresham dynamic

so pay it forward? …#139 disciple

is this true? that bankruptcy for the auto companies has released legal liability for product defects,

…well if the product is made elsewhere

#149 Vancouver_Bear on 05.30.11 at 2:37 pm

#6 Crazy on 05.29.11 at 8:11 pm

Yep, it’s a great country….but it’s a pity it is inhabited by numbnuts like you!

#150 Seller on 05.30.11 at 2:50 pm

Hi blog dawgs,

I own a Vancouver home and have a need (family) to stay living in it for the next 5-7 years. Has anyone ever heard of sale/leaseback transactions whereby I could get out of the financial risk without necessitating moving out?

#151 BrianT on 05.30.11 at 2:57 pm

#142Devore-The mandate of the IMF is to transfer wealth from outsiders to insiders. Canadian taxpayers pay a higher % to these guys than even US taxpayers do-Canadian taxpayers are outsiders, just like the Greek population.

#152 BPOE on 05.30.11 at 3:08 pm

Out of the way renters we got penthouses to buy
TORONTO – A Toronto penthouse apartment has been sold for $28 million, setting a Canadian record.

#153 Solitario on 05.30.11 at 3:16 pm

The call for patience…false prophet’s last defence… given enough time, even a blind squirell would eventually find a nut… BTW, what about your prediction regarding another minority government…I know, I know…you weren’t dead wrong…we just need more patience…

#154 Vancouver_Bear on 05.30.11 at 3:22 pm

May 26th part3…..Al Sinclair says: “stop listing your homes…..we gonna kill the market”

#155 disciple on 05.30.11 at 3:28 pm

Here is the root of the problem: Money itself is a commodity. A handful of private individuals are the only ones allowed by YOU to create this commodity, through a combo of ignorance and coercion. This is not capitalism. It is a monopoly. It is a fancy form of fascism.

In a normal transaction between buyer and seller, no new money is created, it is exchanged. In our present system, new money enters the system when banks CREATE it out of nothing. There are those on this blog that think that money somehow DISAPPEARS when debt is repaid. These people are what I like to call: WRONG. If it simply disappeared you would not have ANY inflation. PERIOD.

#156 disciple on 05.30.11 at 3:50 pm

Just as Galileo fought with the priests of his day, we fight with the clergy of the money cult today who maintain the status quo through deliberately imposed ignorance:

“My dear Kepler, I wish that we might laugh at the remarkable stupidity of the common herd. What do you have to say about the principal philosophers of this academy who are filled with the stubbornness of an asp and do not want to look at either the planets, the moon or the telescope, even though I have freely and deliberately offered them the opportunity a thousand times? Truly, just as the asp stops its ears, so do these philosophers shut their eyes to the light of truth.”

#157 Sunny on 05.30.11 at 3:54 pm

“I own a Vancouver home and have a need (family) to stay living in it for the next 5-7 years. Has anyone ever heard of sale/leaseback transactions whereby I could get out of the financial risk without necessitating moving out?”
I did it, I had a “term” in my “Contract of Purchase and Sale” stating that I would rent back on a long term (5 year) lease, I can break it with 60 days written notice, but they can’t:) I also had a “term”, where I got “First Right of Refusal”, so if they needed to sell for any reason I have first rights to buy it back from them. I had both those items written in the contract, as well I had the 5 year lease draw up on the B.C Residential Tenancy Act Agreement

You just need to find an investor, they love long term leases. Also be willing to pay a fair rent (maybe a slight bit higher than the norm), and be an amazing renter! another trick is to offer to pay an entire years rent up front, that would help them with the down payment and possibly help them qualify for a loan, and might even help them avoid CMHC fees.

#158 palebird on 05.30.11 at 3:55 pm


We sold out of the okanagan in 07 after seven years and a divorce.. I felt it was pretty good timing even though it was a “forced sale”. If people there think that 07 is a level they will fall back to well I think they have some serious rethinking to do. At that time I was of the belief that things had pretty much peaked just looking at all the debt loads people were carrying. You could almost smell the fear on these people with all their toys, shiny vehicles and houses and no way to sustain it except for their “equity” in their home.

#159 Can't sell for the profit ? on 05.30.11 at 3:58 pm

Without the interest rates moving, prices are going to remain stagnent… A buddy of mine has four condos which he wants to dump, but isn’t getting a good price…so the low interest rates helps him to hold on even with zero or negative cash flow…. Many Many are holding on because of the cheap rates…

Its a tough situation, if you get in this year or next you will still be screwed like the people who got it last year or earlier. People might not have patience until 2013, so lots of critical decision to make. Also the industry will try to hold on and get as many suckers as possible before it all starts to crash.

#160 Vancouver_Bear on 05.30.11 at 4:03 pm

#75 Gord In Vancouver on 05.29.11 at 11:57 pm

Gord, save your breath….ignore that idiot. He is just annoying fly who craps in this blog….nothing more or less.

#161 disciple on 05.30.11 at 4:09 pm

I’ve heard it said that for every litre of gasoline that makes it to your local station, it takes one litre of gasoline to get it there. If true, then does anyone else see the problem with this? We need better solutions, we need better technologies. And fast…
While the world lies in ruins all around you just outside of your little bubble, making your fictitious 8% along with the rest of the financial parasite class doesn’t really help…Do you see that?

#162 Nostradamus Le Mad Vlad on 05.30.11 at 4:12 pm

#48 Hoof – Hearted — “I say it closes its doors in 2 years…picked the worst time to open.”

Good call. It’s happened before, it will happen again.

#69 BPOE — “Buyer A is on the way to paying off his mortgage . . .”

Unless he / she / they are laid off, their job/s outsourced, illness comes a’calling — what then? Surely you would have words of comfort (and money to give)!

#71 Whistle punk — “. . . it is 1982 all over again.” — In 1982, interest rates were +/- 22%. ‘Owzat look on a $375K mtge. nowadays?

#74 Frankie — “The Toronto Maple Leafs win the cup . . .” — The last time the Leafs won anything was when Ramses II was Pharoah. Do the Leafs still exist?

#89 realpaul — “Higher rates are going to be an automatic disaster for thousands . . .”

Excellent point; see #91 TBL’s post.

#91 TheBigLebowski — “The IMF was set up as a looting operation.”

That’s what they are doing very well right now, using distraction after distraction to keep us off guard and, when no one is paying attention, stealing all the goods we have from right under our noses.

But how many sheeples will ever bother to question the ‘authorities’?

#131 debtified — “Mr. Carney – History will remember you as a fool.” — See #144 LUYM’s great cartoon!

#139 disciple — Nice story. There are some decent people left in the world!

#144 Live Under Your Means — Great cartoon, and does it reflect reality or what!

#163 Mr. Plow on 05.30.11 at 4:38 pm

#108 Sid

Depends. If you have been making your payments most banks will just send the renewal papers in the mail, you sign them and send them back and you are done.

If you are changing banks, or products then you may have to go through a re-approval process.

In terms of CMHC, you only pay the premium once. But again, if you change banks it may be considered a new mortgage which needs to be insured. That one I am not 100% on though.

#164 realpaul on 05.30.11 at 4:40 pm

Just heard an old guy complaining on the radio about the amount of HST he had to pay on his $670,000 ‘retirement home’. I would said that the HST is the least of his worry’s. But………………..he’s got a point…the taxes levied on real estate are well into the obscene theatre of the absurd. There is around ‘just quoting off the back of a napkin’ $150,000 in tax, DCC’s, costs, fee’s etc etc etc that go into your average $500,000 home. The sloppy fat bureaucrats have been raking it in as ‘values’ have skyrocketed. It has made a real pig farm out of every level of government… feeding crack to a sow.

It certainly doesn’t help that the Corruption Republic of China has every bank manager, loans officer, police official , bureaucrat, government worker stealing money from the institutions by the trunk load. The only reason it can’t be stopped is that everyone is in the scam…….which is steal steal steal…graft graft graft….and then bundle up the family and rush through into Canada on a fast track ‘Officially sanctioned corruption money laundry express train’…courtesy of the government of Canada. No one worry’s about getting caught…the rot is ubiquitous………its become like a game of musical chairs to see how much you can steal and how fast you can get out.

#165 Mr. Plow on 05.30.11 at 4:40 pm

#101 House

You were warned by many here that some of us thoughts rates would stay low.

Suck it up.

#166 Mr. Plow on 05.30.11 at 4:42 pm

#94 maria

I think you typically see huge bumps and drops at the end and beginning of months as listings expire, and as listings get renewed.

But keep your eye on it, who knows could be the start of a trend leading to a flooded market.

#167 Mr. Plow on 05.30.11 at 4:44 pm

#93 West Coast

I think it would be OK to just write “ass”. I doubt the “moderator” would mind.

#168 Bob Copeland on 05.30.11 at 5:13 pm

I can’t agree with you on the slow decline. I completed a $1.8 million dollar commercial building and closed in February 2008 in Indiana. ONE year later I listed it for a new lower price of $1.2 million dollars and nobody looked. It is now listed for $900 thousand and no lookers. If that isnt a rapid decline I don’t know what is.

#169 Ronaldo on 05.30.11 at 5:15 pm To raise or not to raise, that is the question for Mr. Carney. “MMMMMMM let’s see now, should I, or shouldn’t I? How much longer can I hold off and keep this bubble going? Geez, this is really a tough balancing act. What should I do Garth?”

Did you hack my mail? — Garth

#170 Mikey the Realtor on 05.30.11 at 5:21 pm

#120 Junius

The proof is in the pudding, I cant help you if you fail to see it.

#171 the_apocalyptic_one on 05.30.11 at 5:27 pm

Expensive unaffordable houses do not make anyone rich, just heavily indebted. Rich means having disposable income to live a comfortable and enjoyable life. Watch the suicide rate climb as the noose most Canadians have themselves knotted begins to tighten! Sad but true!

This blog is uplifted by your mere presence. — Garth

#172 randman on 05.30.11 at 5:31 pm

It doesn’t matter…none of this matters compared to what’s coming down the pike

“Greece, Spain, Ireland, Iceland, they are just part of the burning fuse. We hear very little rational discussion about the issues. The issues are simple. The world has far more debt than it can support. Unions and workers have extracted promises from government that can never be paid. We simply cannot afford the lever of government we have but no one wants to address the issue. They keep kicking the can down the road. One day very soon the music will stop and everyone will try to find a chair to sit in only to find in this epic game of musical chairs, there are no chairs.

It’s heresy for me to suggest it but the very best investment for the next six months might well be cash. The kind of dirty filthy cash that you can shove under your mattress and use when the system comes to a grinding halt. Gold may well be the currency of choice to rebuild the system but to get through the chaos that is coming, I think you want the kind of cash you can hold and spend.

The revolution may have started in Egypt and Libya and Spain and Greece but I’ll bet money, cash money, that revolution heads our way soon.”

Doomer mush. There will be no crash. Just surprises. — Garth

#173 shanks on 05.30.11 at 5:52 pm

#139 disciple
awesome story… there IS still hope!

#174 Harry on 05.30.11 at 6:01 pm

#55 Utopia
#113 Toon Town Boomer,
Saskatoon is not going to crash. Unemployment rate might be at 6.1% but that is just a blip. Home sales are going to be 10 to 15% higher than last May AND the average price will be up as well. No bust here.

Interest rates may go up, but slowly and nothing to really worry about for most. As long as China and the rest of Asia keep buying our resources, Saskatoon is immune.

This is sarcasm. Right? — Garth

#175 randman on 05.30.11 at 6:16 pm

Possible run on banks in Greece

Billions withdrawn on Friday

“Only a few steps separating from Friday to yesterday’s mass panic! From early morning to counter the banks there is serious pressure for withdrawals of deposits, especially small amounts. The pressure on banks began last Wednesday, culminating in yesterday’s day.

It is significant that Thursday and Friday, banking sources estimate that rose around 1.5 billion euros in total! According to the same month in May estimated the outflow estimated at least 4 billion from 2 billion in April.

The majority of depositors rushed to withdraw for pensioners and small savers and amounts ranging from 2-3000 lifted until 10 -15 000 euros. Motivation in most cases it was the fear that led the country into bankruptcy, deposits frozen even temporarily left without cash, or even lose their savings.

Politicians do not seem to fully understand the risks posed by a widespread panic, not only for the stability of the banking system but for the economy

Read more:

#176 Hoof - Hearted on 05.30.11 at 6:21 pm

Four Seasons sells penthouse apartment in downtown Toronto for $28 million


See there goes Garth again….speculating in a single asset class with his blog profits

PS When can we all come for a house warming?

#177 Hoof - Hearted on 05.30.11 at 6:29 pm

#157 Sunny

Yes…this could be a mutually benefical agreement.
One could even perhaps negotiate FREE Rent for X months/years in lieu of actual rent, whatever works best..

Then one can park the cash in Garth’s mattress or even a diversified portfolio….indications are the rates will increase.

In my neighbourhood, the School District purchased properties for a school. They paid market price for the land and some owners even negotiated FREE Rent for up to 5 years.

#178 Hoof - Hearted on 05.30.11 at 6:37 pm

Keep in mind …

Review the Economic Hitman video on YouTube

Canada is rich in resources.

The agenda could simply be to lure us,fool us…. we collapse..and then we surrender our autonomy and assets at far below their market value. (including vast water resources)

The overall Goldmans Sachs agenda with alumni Mark Cornholio at BoC….may be “equality” aka the entire world is plundered to 3rd World Status.

#179 Imstupid on 05.30.11 at 7:00 pm

Someone just bought penthouse of ritz Carlton in Toronto. 9000 sq feet 28 million. That’s almost 32k a sq foot. What a deal. Lol. Thank god that their aren’t any kids starving in Africa. I bet that will Warp the May treb numbers. I don’t know but maybe the sky above the ritz rains gold. It must to justify that price.

#180 Nostradamus Le Mad Vlad on 05.30.11 at 7:16 pm

“This blog is uplifted by your mere presence. — Garth”

Why, thank you young man. How kind of you to say such gracious things!

#178 Hoof – Hearted — “The agenda could simply be to lure us,fool us…. we collapse..and then we surrender our autonomy and assets at far below their market value. (including vast water resources)”

Bingo! Hit the nail on the head. Greece, Ireland and others are going through it. Another reason for these godforsaken perpetual wars. That’s what the NAU = SPP are for.
The Winnipeg Free Press made it on today! Libya NATO attempting self-destruction?

1:28 clip Germany will close all nuke reactors by 2022, and Fukushima — worse than Chernobyl.

Inflation Shrinking paycheques. Mobius Recall when Leap 20/20 said the second half of 2011 would be substantially worse than anything before? Pakistan “China might then fight back without firing a shot, by dumping the US debt they are holding,which may well spell the total collapse of the US economy.” 16:11 clip Marc Faber says QE3 begins when stock markets dive. Housing Apocalypse — “What is downright disturbing of the 2.2 million homes in foreclosure you have 675,000 homes (31 percent of the pool) that have not made a payment in over two years. That is right, two full years.”

2:54 clip The Toilet and FFs. Govts. insult our intelligence. GM Corn Science playing god? Report Much like a weather report, it can be right or wrong. From the CIA. Turning Points Is the present empire at an end? Do birds fly (only ostriches).

5:54 clip Different leaders in different times explaining The Money Changers. TSA Not particularly effective.

Hell on Earth Courtesy neocons.

#181 Daystar on 05.30.11 at 7:17 pm

#164 realpaul on 05.30.11 at 4:40 pm

As I dig deeper to find a solution for your bigotry realpaul, well, there are no easy answers. Normally humility works as a tactic against behaviors such as realpauls but in his case it won’t most likley due what lies behind his psychological profile.

There are a myriad of choices to choose from in psychopathy and some folks in fact, share more than one particular profile which can create confusion in diagnosis but as it is with most forms of phycopathic behaviors, it begins early, often developing in childhood.

Generally, dissocial behaviors form out of a young child/adult’s ability to cope with stress. Naturally, environmental factors, including parents are involved and since my background knowledge of realpaul is limited, my best advice would be for him to see a psychiatrist based on what I’ve observed over a couple years, having suspected a dissocial disorder for some time now.

I’m being sincere here, helping you as best I can, realpaul. No jokes, no humble pie, the evidence is in, we are into the next level now. You’ve always kind of known that you were a little bit different since the early ongoing… haven’t you?

Nevertheless, based on my simple observations of your various forms of bigotry over the last couple years or more, I would suggest that you look into the SECONDARY PSYCHOPATHIC (Group) profile.

It would do you well realpaul, to take in the full video provided in the link, but you will find a quick example in 21:20 of this link below:

I would venture to say that its worthwhile to watch 24:43 on for the rest of us, if not the entire video. Readers should acknowledge that studies coming out of Berkeley:

Well known as being the top university in the U.S. and possibly the world in the field of phycology, Berkeley, as well as the World Health Organization and American Psychiatric association classifies “dissocial personality disorder” in the human population in all of its various profiles and lesser/greater extremes to number around an estimated 4 to 5% of the human population (numbers vary with the exclusion of inmates in some studies). Of this 4 to 5% of the human population falling in dissocial (antisocial) personality disorders, , its estimated that 1% of the human population are psychopaths in the historical definition (combined sub classes, not counting borderline cases). These estimates shouldn’t really surprise readers when they think about it and it shouldn’t surprise readers to acknowledge that some commentors on this site as well as any other, exibit psychopathic behavior online for obvious reasons so… lets be aware out there.

Required reading for realpaul:

#182 randman on 05.30.11 at 7:17 pm

“Doomer mush. There will be no crash. Just surprises. — Garth”

“In an almost verbatim repeat of Carl Icahn’s words of caution which we noted yesterday, Templeton’s legendary chairman Mark Mobius said that “another financial crisis is inevitable because the causes of the previous one haven’t been resolved” during a luncheon (menu included herb crusted chicken breast with cheese and tomato sauce, mashed potato and green vegetables, seasonal salad) at the Foreign Correspondents’ Club of Japan in Tokyo. Bloomberg reports: “There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.

#183 randman on 05.30.11 at 7:18 pm

Carl Icahn and Mark Mobius…….

Garth…you’re going up against some heavyweights!!!

#184 Hoof - Hearted on 05.30.11 at 7:29 pm

G8/G20 police raked in bonuses, OT pay

North Bay city police sent eight officers who were paid overtime rates for roughly three-quarters of all their hours, netting each officer an average of $5,742.70 for eight days of work.

The RCMP flew in 16 officers from the Vancouver Police Department for one week, paying them a total of $117,736 — $85,504 of which was overtime — and paying each officer an average $7,358.52 for the week — not including benefits, meals and travel expenses.


This is Bullshite

Typical of a regime type Gov’t

Keep the soldiers / police happy….makings of a police state to do their masters bidding

#185 GregW, Oakville on 05.30.11 at 7:31 pm

Hi#76 Nostra, Thanks for the links. I wonder if people will take notice of the health related ones?

#186 a prairie dawg on 05.30.11 at 7:47 pm


It’ll probably just be some uber-wealthy jagoff that wants to be able to say, “I own the penthouse at the Ritz-Carlton…”

It’s not like a struggling family is moving in. lol

But ya, it’ll skew the price curve a bunch. ;)

#187 Hoof - Hearted on 05.30.11 at 7:59 pm

If West Van is getting invaded by HAM $$$…. the end is nigh.

Much of West Van is old white money or overnite milionaires…

When they fart..they are so anal retentive they can play ” Flight of the Bumblebee”

Many of them are developers would made a killing off HAM $$$’s

Maybe rent Frankenstein movies..what goes around comes around.

#188 Alex on 05.30.11 at 8:02 pm

I live at Sheppard /Bathurst area in Toronto, and today saw a For sale sign where realtor was offering free Cruise to a buyer of that house. Never for the past 8 years living in this area I saw anything like it, indeed times are changing.

#189 Pr on 05.30.11 at 8:34 pm

Mamamia! Quebec province. This month of may will be better than the same month last year! Thank you 0%-5% cash down and 2.2% interest rate. Unbelievable!

#190 james . on 05.30.11 at 8:39 pm

our rates rising tomorrow

#191 jess on 05.30.11 at 9:11 pm

… Belarus Raises Key Rate to 16%, Most in World, to Stem Outflows?

#192 AG Sage on 05.30.11 at 9:11 pm

I don’t see that it’s possible, but do I hope you up there in Canada can arrange a slow melt.

#193 TurnerNation on 05.30.11 at 9:25 pm

#104 detalumis is Chad’s dad!!! Reunited by this blog.
Is there anything this obtuse weblog cannot achieve??

#194 Toon Town Boomer on 05.30.11 at 9:31 pm

# RE:174 Harry
If that aint sarcasm, it’s just another a realtor at work.

#195 Utopia on 05.30.11 at 10:28 pm

#174 Harry wrote….

“Saskatoon is immune”

Funny stuff Harry.

As you probably already know, Saskatchewan is a commodity economy. Oil, gas, uranium, potash, diamonds and grains are our primary exports and assets.

We are naturally susceptible to some of the wildest economic swings of any province on that basis. We are resource rich but have very little manufacturing depth, few head offices and a small service based population.

At this time, Saskatchewan housing is statistically the most overpriced in Canada based on historical averages. Right now though, it is boom times as I mentioned because commodities are HOT. But that never lasts and we all know it here.

Some of the sharpest property declines in the country will almost certainly appear here if the traditional pattern of boom/bust cycles unfolds as usual.

So our Achilles heal is energy exports to the US and Chinese demand for Potash and Uranium but any global slowdown could kill resource prices in a hurry and our bottom line revenue will fall like a rock. Just like always.

I expect it. You should too.

#196 David B on 05.31.11 at 3:04 pm


Right again Mr. Turner …. Renters have more disposable cash!

U.S. NEWS MAY 31, 2011, 3:28 P.M. ET Miami Renters Fuel a Boomlet

Now if only you could get Canadian Interest right?